
[Federal Register Volume 81, Number 22 (Wednesday, February 3, 2016)]
[Notices]
[Pages 5800-5802]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-01929]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76993; File No. SR-CBOE-2016-004]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to the Options Regulatory Fee

 January 28, 2016.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on January 14, 2016, Chicago Board Options Exchange, Incorporated (the 
``Exchange'' or ``CBOE'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule change as described 
in Items I, II, and III below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Chicago Board Options Exchange, Incorporated (the ``Exchange'' or 
``CBOE'') proposes to amend the Options Regulatory Fee. The text of the 
proposed rule change is available on the Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's 
Office of the Secretary, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to increase the Options Regulatory Fee 
(``ORF'') from $.0064 to $.0081 per contract in order to help ensure 
that revenue collected from the ORF, in combination with other 
regulatory fees and fines, meets the Exchange's total regulatory costs. 
The proposed fee change would be operative on February 1, 2016.
    The ORF is assessed by the Exchange to each Trading Permit Holder 
for all options transactions executed or cleared by the Trading Permit 
Holder that are cleared by The Options Clearing Corporation (``OCC'') 
in the customer range (i.e., transactions that clear in a customer 
account at OCC) regardless of the exchange on which the transaction 
occurs.\3\ In other words, the Exchange imposes the ORF on all 
customer-range transactions executed by a Trading Permit Holder, even 
if the transactions do not take place on the Exchange. The ORF also is 
charged for transactions that are not executed by a Trading Permit 
Holder but are ultimately cleared by a Trading Permit Holder. In the 
case where a Trading Permit Holder executes a transaction and a 
different Trading Permit Holder clears the transaction, the ORF is 
assessed to the Trading Permit Holder who executed the transaction. In 
the case where a non-Trading Permit Holder executes a transaction and a 
Trading Permit Holder clears the transaction, the ORF is assessed to 
the Trading Permit Holder who clears the transaction. The ORF is 
collected indirectly from Trading Permit Holders through their clearing 
firms by OCC on behalf of the Exchange.
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    \3\ The ORF also applies to customer-range transactions executed 
during Extended Trading Hours.
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    The ORF is designed to recover a material portion of the costs to 
the Exchange of the supervision and regulation of Trading Permit Holder 
customer options business, including performing routine surveillances, 
investigations, examinations, financial monitoring, as well as policy, 
rulemaking, interpretive and enforcement activities. The Exchange 
believes that revenue generated from the ORF, when combined with all of 
the Exchange's other regulatory fees and fines, will cover a material 
portion, but not all, of the Exchange's regulatory costs. The Exchange 
notes that its regulatory responsibilities with respect to Trading 
Permit Holder compliance

[[Page 5801]]

with options sales practice rules have largely been allocated to FINRA 
under a 17d-2 agreement.\4\ The ORF is not designed to cover the cost 
of that options sales practice regulation.
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    \4\ See Securities Exchange Act Release No. 76309 (October 29, 
2015), 80 FR 68361 (November 4, 2015).
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    The Exchange will continue to monitor the amount of revenue 
collected from the ORF to ensure that it, in combination with its other 
regulatory fees and fines, does not exceed the Exchange's total 
regulatory costs. The Exchange monitors its regulatory costs and 
revenues at a minimum on a semi-annual basis. If the Exchange 
determines regulatory revenues exceed or are insufficient to cover a 
material portion of its regulatory costs, the Exchange will adjust the 
ORF by submitting a fee change filing to the Commission. The Exchange 
notifies Trading Permit Holders of adjustments to the ORF via 
regulatory circular. The Exchange endeavors to provide Trading Permit 
Holders with such notice at least 30 calendar days prior to the 
effective date of the change.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\5\ Specifically, the 
Exchange believes the proposed rule change is consistent with Section 
6(b)(4) of the Act,\6\ which provides that Exchange rules may provide 
for the equitable allocation of reasonable dues, fees, and other 
charges among its Trading Permit Holders and other persons using its 
facilities. Additionally, the Exchange believes the proposed rule 
change is consistent with the Section 6(b)(5)\7\ requirement that the 
rules of an exchange not be designed to permit unfair discrimination 
between customers, issuers, brokers, or dealers.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
    \7\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposed fee change is reasonable because 
it would help ensure that revenue collected from the ORF, in 
combination with other regulatory fees and fines, does not exceed the 
Exchange's total regulatory costs. Moreover, the Exchange believes the 
ORF ensures fairness by assessing higher fees to those Trading Permit 
Holders that require more Exchange regulatory services based on the 
amount of customer options business they conduct. Regulating customer 
trading activity is much more labor intensive and requires greater 
expenditure of human and technical resources than regulating non-
customer trading activity, which tends to be more automated and less 
labor-intensive. As a result, the costs associated with administering 
the customer component of the Exchange's overall regulatory program are 
materially higher than the costs associated with administering the non-
customer component (e.g., Trading Permit Holder proprietary 
transactions) of its regulatory program.\8\ The Exchange believes the 
proposed fee change is equitable and not unfairly discriminatory in 
that it is charged to all Trading Permit Holders on all their 
transactions that clear in the customer range at the OCC.
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    \8\ If the Exchange changes its method of funding regulation or 
if circumstances otherwise change in the future, the Exchange may 
decide to modify the ORF or assess a separate regulatory fee on 
Trading Permit Holder proprietary transactions if the Exchange deems 
it advisable.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE does not believe that the proposed rule change will impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, because it applies to all 
Trading Permit Holders. The proposed ORF is comparable to fees charged 
by other options exchanges for the same or similar service. The 
Exchange believes any burden on competition imposed by the proposed 
rule change is outweighed by the need to help the Exchange adequately 
fund its regulatory activities to ensure compliance with the Exchange 
Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \9\ and paragraph (f) of Rule 19b-4 \10\ 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2016-004 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2016-004. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-CBOE-2016-004 and should be 
submitted on or before February 24, 2016.


[[Page 5802]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Robert W. Errett,
Deputy Secretary.
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    \11\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2016-01929 Filed 2-2-16; 8:45 am]
 BILLING CODE 8011-01-P


